CIBC Launches its Second Swiss Franc-Denominated Covered Bond

Canadian Imperial Bank of Commerce (CIBC) issued a seven-year mortgage covered bond denominated in Swiss Francs (CHF) this week (June 2), reportedly making CIBC the largest single-tranche foreign CHF covered bond issuer since 2006.

Pricing was at 10 basis points over mid-swaps.

This is CIBC's second foray into Swiss Franc covered bonds (CBs).  The first came in December 2009, when the bank priced a successful CHF 675 million issue.  Although CIBC's 2009 CHF issuance was larger in total than the latest one, it was divided into two tranches: CHF 300 and CHF 375, with two- and five-year maturities.

The June 2 CHF CB is backed by residential mortgage loans insured by the Canada Mortgage and Housing Corporation (CMHC), like CIBC's $2 billion U.S. dollar-denominated CB issue earlier this year.

"Swiss investors participate in the euro market to a degree, but the local investor universe appears to be bigger for issuance in their domestic currency," CIBC's Wojtek Niebrzydowski (VP, Treasury) told Covered Bond Investor™ in an interview after the bank's December 2009 CHF issuance.  He also noted that the 2009 Swiss Franc deal "allowed us to price the transaction materially below where a comparable euro issuance can be done at present."